Ariana Resources plc : KIZILTEPE RESOURCE UPDATE

25 April 2016
AIM: AAU

SUBSTANTIAL INCREASE IN KIZILTEPE RESOURCE

Ariana Resources plc ("Ariana" or "the Company"), is pleased to announce an increase and update of its JORC compliant Mineral Resource estimate for the Kiziltepe Project following its recent drilling programme in Turkey.  Kiziltepe is part of the Red Rabbit Joint Venture with Proccea Construction Co. and will be 50% owned by Ariana once mine construction is completed in H2 2016.

Highlights:

• Overall increase in Mineral Resource estimate of c. 44,500 oz Au and 886,000 oz Ag to a total of 195,200 oz Au and 3.15Moz Ag contained metal on four main veins, excluding existing resources on several subsidiary veins such as Kepez.*

• Substantial increase in tonnage (to c. 2.5Mt) with a corresponding reduction of grade (to c. 2.5 g/t Au and 40.3 g/t Ag) as a result of adoption of revised geological model.

• Large increase (approx. 45%) in volume of new Whittle-generated pit shells in comparison to designed pits, notably Arzu North and Derya.

• Whittle base case optimisation demonstrates a potential increase in mine life from c. 8 years to c. 10 years at a designed throughput rate of 150,000 tonnes per annum.

             
Dr. Kerim Sener, Managing Director, commented: 

"Following the completion of an extensive review of our geological model and the addition of new drilling data, this result is a very pleasing update on our resource estimate for the Kiziltepe Mine.  Importantly, the discovery cost of these additional ounces is approximately US$5 per ounce, which demonstrates the very cost-efficient exploration we are able to conduct on this project.

The resource update, in addition to Whittle optimisation work, demonstrates the potential for Kiziltepe to provide for a mine life of about 10 years at the designed throughput rate of 150,000 tonnes per annum.  This also excludes several subsidiary veins on which we have already established resources, which with further work may add further to mine life. 

With the enlarged resource and with expectations of further resource growth, we are now reviewing our options to potentially increase the mine throughput rate up to 200,000 tonnes per annum with our partners, Proccea.  Meanwhile, construction at the mine is proceeding well, with delivery of the ball-mill to site occurring a few days ago."

* All Mineral Resource figures in the announcement are quoted gross with respect to the Red Rabbit Joint Venture.  Ariana will own 50% of the production from the JV when the Kiziltepe Mine is operational.

Resource Estimate

Following the completion of a 1,208m Reverse Circulation ("RC") drilling programme in December 2015 (see 31 January 2016 Announcement), geological consultants Odessa Resources Pty. Ltd. undertook a resource estimate for Kiziltepe.  The recent RC drilling coupled with certain diamond drilling completed in late 2011 and early 2012, totalling 1,290m, was used in the new estimation.

The new Kiziltepe JORC 2012 compliant Mineral Resource estimate has been defined by 213 drill holes and 125 rock-saw channels on 212 cross-sections with typically 10m section spacing (see JORC Table 1 below).  Wireframes were constructed using sectional polylines defined by a cut-off of 0.5 g/t gold. Several lodes were created from the sectional interpretations, which are orientated NW and WNW and typically dip steeply at up to 85 degrees towards the northeast (Figure 1) comprising four main areas, Arzu South, Arzu North, Banu and Derya. Top cuts of 15 g/t Au and 200 g/t Ag were used and a variable bulk density ranging between 2.50 and 2.65 g/cm³ were assigned to the appropriate solids and used for the resource estimation.  Grade interpolation was by the Inverse Distance Squared ("ID2") method.

The previous estimate, completed in 2013 by Tetra Tech, identified a JORC 2004 compliant Mineral Resource of 1,502,000 tonnes at 3.12g/t gold and 46.97g/t silver on four main veins (excluding separate estimates on subsidiary veins and alteration halo mineralisation), based on drilling completed until 2011.  The addition of 16 diamond holes and 19 RC holes undertaken for infill and extension drilling at Kiziltepe completed since late 2011, in addition to corresponding modifications of the geological model, has increased the Mineral Resource on these four main veins to 2,436,315 tonnes at 2.49g/t gold + 40.27g/t silver and has confirmed the potential extension of the Arzu structure under cover between Arzu South and Arzu North.  This estimate specifically excludes several subsidiary veins on which Inferred resources have previously been established (for an additional 18,555 oz Au equivalent), such as Kepez, Derya West, Aybor, Ceylan and Arzu Far North, in addition to a potential 28,230 oz Au equivalent, referred to as "Alteration Halo" in the Tetra Tech estimate.  Further drilling, modelling and economic assessments will be required on these subsidiary veins and alteration halo mineralisation to determine their potential to be included as Ore Reserves. 

Table 1: Summary 2016 Kiziltepe JORC 2012 compliant Mineral Resource estimate, based on 125 diamond and 76 RC drill holes.  This estimate excludes several subsidiary veins such as Kepez, which were a part of the previous resource estimate.  Gold equivalent is the sum of the gold ounces and the gold equivalent ounces of silver based on a price ratio of 60:1. Reporting at a 1/g/t Au cut off, excluding Banu which is included in these figures at a 0.5 g/t Au cut-off.  All figures are quoted gross with respect to the Red Rabbit Joint Venture.

Classification	Tonnage (t)	Grade Au (g/t)	Grade Ag (g/t)	Au (oz)	Ag (oz)	Au equiv. (oz)
MEASURED	1,051,491	3.19	43.7	108,009	1,476,700	132,621
INDICATED	512,422	2.16	40.6	35,650	668,490	46,792
INFERRED	872,402	1.84	36.0	51,545	1,008,906	68,360
GLOBAL	2,436,315	2.49	40.3	195,205	3,154,096	247,773

Figure 1, which can be accessed by clicking on or pasting the following link into your web browser: http://hugin.info/138153/R/2006265/741269.pdf, is the three-dimensional model of the Kiziltepe vein system (in yellow) looking north, showing the modelled ore zones and current drilling. The Arzu Central target area is shown in grey.

Whittle Optimisation

Whittle Pit Optimisation Software was used by Auralia Mining Consulting Pty. Ltd. to define pit shells on all-materials that contained grade within the resource block model.  The optimisation work generated four pit shells at Arzu South, Arzu North, Banu and Derya respectively (Figure 2).  The Whittle base case optimisation work was run using the parameters provided in Table 2.  The Arzu South pit shell is the largest with dimensions of 860 x 145 x 90m, followed by the Arzu North (530 x 175 x 85m), Derya (545 x 150 x 80m) and Banu (485 x 90 x 50m) pit shells.  The output of the Whittle optimisations is provided in Table 3.  It is important to note that actual pit designs may vary from these optimised pit shells based on a variety of modifying factors that will result from an increase in the accuracy and definition of future work, notably additional confirmatory and grade control drilling, geotechnical analysis and mine planning.  The bulk of the Mineral Resource sits within these four pit shells and therefore has a high probability of being converted into Ore Reserve classification once these modifying factors are fully taken in to account.

Figure 2, which can be accessed by clicking on or pasting the following link into your web browser: http://hugin.info/138153/R/2006265/741270.pdf, is the three-dimensional model of the four main veins on Kiziltepe comprising the current resource estimate, showing new Whittle optimised base case pit shells (in red), the designed pits from the Definitive Feasibility Study (in light blue) and the new vein model (in yellow).

Table 2: Whittle optimisation parameters used for the Kiziltepe base case.  Cut-off grades were calculated as per the formula: ECOG = (Mining Dilution x Processing Cost)/Processing Recovery x (Sell Price - Sell Costs).  Note that a gold equivalent cut-off grade was not implemented in the base case Whittle optimisations.

Whittle Input Parameter	Value	Unit
Overall Pit Slope	50	Degrees
Mining Cost (ore and Waste)	1	US$/t
Mining Dilution	10	%
Mining Recovery	95	%
Processing Cost	23	US$/t
Processing Recovery (Au)	87	%
Processing Recovery (Ag)	64	%
Discount Rate	8	%
G&A Cost (haulage at $8.40/t plus G&A at $1.60/t)	11	US$/t
Metal Price Gold	1,060	US$/oz
Metal Price Silver	15	US$/oz
Total Selling Cost Au (NSR 2%)	34.84	US$/oz
Total Selling Cost Ag (NSR 2%)	0.69	US$/oz

The Whittle base case optimisations were conducted on the basis that all JORC classified material, including Inferred and Unclassified, was included to be considered for processing.

Table 3: Output of Whittle base case optimisation, showing key parameters.  Numbers are rounded to one decimal place. 

Ore t input to mill	1,520,000
Au grade input to mill	2.8 g/t
Ag grade input to mill	38.8 g/t
Waste t	21.8 Mt
Strip Ratio	14.3
Mine life @150ktpa mill throughput	10.2 years
Product Au	119,000 oz
Product Ag	1,214,000 oz

Contacts:

Ariana Resources plc	Tel: [phone]
Michael de Villiers, Chairman
Kerim Sener, Managing Director
Beaumont Cornish Limited	Tel: [phone]
Roland Cornish / Felicity Geidt
Beaufort Securities Limited	Tel: [phone]
Jon Belliss
Loeb Aron & Company Ltd.	Tel: [phone]
John Beresford-Peirse

Editor's Notes

Competent Person:

The information in this report that relates to Mineral Resources is based on information compiled by Mr. Alfred Gillman of Odessa Resources Pty. Ltd., who is a fellow of the Australasian Institute of Mining and Metallurgy.  Mr. Gillman is a consultant to Ariana Resources plc and has sufficient experience relevant to the styles of mineralisation and type of deposit under consideration and to the subject matter of the report to qualify as Competent Person and defined in the 2012 edition of the Australasian Code for the Reporting of Exploration Results Mineral Resources and Ore Reserves (JORC Code).  Mr. Gillman consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Dr Kerim Sener, BSc (Hons), MSc, PhD, is the Managing Director of Ariana Resources plc.  A graduate of the University of Southampton in Geology, he also holds a Master's degree from the Royal School of Mines (Imperial College, London) in Mineral Exploration and a doctorate from the University of Western Australia.  He is a Fellow of The Geological Society of London and has worked in geological research and mineral consultancy in Africa, Australia and Europe.  He has read and approved the technical disclosure in this regulatory announcement. 

About Ariana Resources:

Ariana is an exploration and development company focused on epithermal gold-silver and porphyry copper-gold deposits in Turkey.  The Company is developing a portfolio of prospective licences selected on the basis of its in-house geological and remote-sensing database, on its own in western Turkey and in Joint Venture with Eldorado Gold Corporation in north-eastern Turkey.  Eldorado owns 51% of this joint venture and are fully funding all exploration work on the JV properties, while Ariana owns 49%.  The total resource inventory within this JV is 1.09 million ounces of gold.

The Company's flagship assets are its Kiziltepe and Tavsan gold projects which form the Red Rabbit Gold Project.  Both contain a series of prospects, within two prolific mineralised districts in the Western Anatolian Volcanic and Extensional (WAVE) Province in western Turkey.  This Province hosts the largest operating gold mines in Turkey and remains highly prospective for new porphyry and epithermal deposits.  These core projects, which are separated by a distance of 75km, are presently being assessed as to their economic merits and now form part of a Joint Venture with Proccea Construction Co.  The total resource inventory at the Red Rabbit Project stands at 475,000 ounces of gold equivalent. 

Beaufort Securities Limited and Loeb Aron & Company Ltd. are joint brokers to the Company and Beaumont Cornish Limited is the Company's Nominated Adviser.

For further information on Ariana you are invited to visit the Company's website at www.arianaresources.com.

JORC Table 1
Ariana Resources Kiziltepe Project

The table below is a description of the assessment and reporting criteria used in the Kiziltepe Project Mineral estimation that reflects those presented in Table 1 of The Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2012).  The Mineral Resource statement was prepared for the Kiziltepe Project.

Sampling techniques and Data

Sampling techniques

• Reverse circulation (RC) chips were collected at 1m intervals and in some cases over 0.5m intervals over the mineralised zone. The chips were collected into plastic sample bags from a cyclone to ensure maximum recovery. The samples were split using a standard riffle-splitter to around 0.25 to 0.5 kg per sample and sent to an ISO-accredited laboratory in Romania for Au and Ag analysis by fire assay.
• Full core was split using a rock saw and half-core samples were taken at variable intervals. Core recovery was recorded into the database.

Drilling techniques

• Percussion
• Reverse Circulation (130mm diameter)
• Diamond coring -  NQ diameter

Drill sample recovery

• Core recoveries were monitored and were generally good (>95%).
• RC recoveries were routinely monitored.

Logging

• All RC and core holes were logged lithologically using a coded logging system for rock type, grain size, colour, alteration and any other relevant observations.
• Mineralised zones were identified from the gamma logging as well as handheld XRF.

Subsampling techniques and sample preparation

• Samples from diamond drilling were collected as sawn half-core or in some cases full-core.
• A combination of cyclone and riffle splitter to produce 0.25-0.5 kg subsamples of RC chips was used. Wet intervals were sub-sampled with scoop or spear. Samples were oven-dried at the laboratory if necessary.

Quality of assay data and laboratory tests

• QC procedures employed in all recent drill programs included the insertion of certified reference standards (1:22), blank samples (1:22), pulp and crush duplicates (2:22) to monitor the accuracy and precision of laboratory data.
• The overall quality of QAQC is considered adequate to ensure the validity of the data used for resource estimation purposes.

Verification of sampling and assaying

• Samples collected by Ariana were submitted to  ALS Global preparation facilities in Izmir and analysis in Romania, Canada or Australia (ISO 9001 accredited).

Location of data points

• All collar positions were located initially by hand-held GPS and later surveyed by a professional surveyor using DGPS equipment.
• Downhole deviation surveys were not routinely carried out in holes of less than 100m depth. Deeper holes were surveyed using a standard electromagnetic deviation tool.

Data spacing and distribution

• At Kiziltepe drill section spacing is typically  10 to 12.5m with several holes often being collared from a single site.

Orientation of data in relation to geological structure

• The dip of the mineralisation for most of the deposit is 75-85^o towards the northeast.
• Local grade continuity follows the dip of the mineralisation for the entire deposit. All drilling is angled, thus intersecting the mineralisation obliquely.
• No biases are expected from the drilling direction.

Sample security

• Samples are stored at a secure company facility (Sindirgi Depot) in a clean area free of any contamination. During an active drilling programme, samples are delivered to the laboratory once a week by Aras Cargo, Sindirgi. 
• Chain of custody is demonstrated by both the company and ALS Global in the delivery and receipt of sample materials. Upon receipt of samples, ALS Global delivers by email to the company's designated QC Manager, confirmation that each batch of 22 samples has arrived, with its tamper-proof seal intact, at the Izmir sample preparation facility. 
• Any damage to or loss of samples within each batch (e.g. total loss, spillage or obvious contamination), must also be reported to the company in the form of a list of samples affected and detailing the nature of the problem(s).

Audits and reviews of sampling and assaying

• Ariana has implemented QA/QC programs covering all aspects of sample location and collection that meets or exceeds the currently accepted industry standards.  Ariana implemented a QA/QC programme based on international best practice during the initial exploration work and subsequent drilling programmes. The company has continued to review and refine the QA/QC programme as these exploration campaigns have progressed. 

Estimation and reporting of Kiziltepe Mineral Resources

Database integrity

• The Kiziltepe resource data is stored in a MS Access database and is managed using MS Access and Excel software. 
• Data was logged onto field sheets which were then entered into the data system by data capture technicians.
• Data was validated on entry into the database, or on upload from the earlier MS Access databases, by a variety of means including the enforcement of coding standards, constraints and triggers. These are features built into the data model that ensure data meets essential standards of validity and consistency.
• Laboratory data has been received in digital format and uploaded directly to the database.
• Original data sheets and files have been retained and are used to validate the contents of the database against the original logging.
• Independent consultants Odessa Resources Pty Ltd performed a visual validation by reviewing drillholes on section and by subjecting drillhole data to data auditing processes in specialised mining software (e.g. checks for sample overlaps etc.). 

Site visits

• Two site visits have been undertaken by Odessa Resources Pty Ltd.
• Ariana staff have visited the site on numerous occasions in order to observe drilling and sampling operations in order to ensure proper QAQC and sampling protocols are maintained.

Geological interpretation

• Veins the Kiziltepe prospect, comprise WNW-NNW trending, sub-parallel, low-sulphidation style veins and related stockworks are hosted by dacite and dacitic pyroclastic units.
• At Arzu North and Banu the veins appear to bifurcate.
• Interpretations of geological surfaces derived from 3D modelling of drillhole lithological data.

Dimensions

Arzu South

• In plan orientation, the deposit is approximately 750 metres long and 2-10m metres wide.
• One primary lode trending 320 degrees and 150m northerly-trending southern section separated from main lode by interpreted fault
• Lodes vary from 2-10m in thickness with main lode averaging 5m thickness
• Mineralisation has vertical extents ranging between 385 and 220mRL. 

Arzu North

• The deposit is approximately 460 metres long and comprises several steeply-dipping parallel and partly overlapping 310 degree trending lodes.
• Mineralisation has vertical extents ranging between 405 and 220mRL. 

Derya

• The deposit is approximately 450 metres long and comprises several steep north-dipping sub-parallel and partly overlapping, 290 degree trending lodes.
• Mineralisation has vertical extents ranging between 400 and 240 mRL (average 90m down dip distance)

Gapz 400

• The deposit is approximately 150 metres long and comprises a single vertical 305 degree trending lode.
• Mineralisation has vertical extents ranging between 410 and 300mRL. 

Gapz 500

• The deposit is approximately 80 metres long and comprises a single steep north-dipping 300 degree trending lode.
• Mineralisation has vertical extents ranging between 395 and 320mRL. 

Banu

• The deposit extends over a strike length of 470m and comprises a single sub-vertical 330 degree trending lode. The lode is disrupted by possible fault/shear zone that breaks up the lode into several sub-parallel segments.
• Mineralisation has vertical extents ranging between 395 and 265mRL. 

Estimation and modelling techniques

• Drillhole sample data was constrained within:
  • Kiziltepe: manually constructed wireframes defined by nominal 0.5g/t Au cut off.
  • Several <0.5g/t Au intervals were included to maintain geological continuity.
     
• Sample data was composited to a 1 metre downhole length using a wireframe-intersection compositing method. Residual samples (those composite intervals for which there was less than 50% of the composite length) were not considered biased and hence were included in the estimate.
• An analysis of the grade distribution characteristics of the domain composites for each deposit was undertaken.  In each case one of the following was identified: noticeable high grade inflection points on log-probability graphs and/or significant gaps on disintegration plots. 
• The following top cuts were used:

       Gold     15g/tAu

       Silver    200g/tAg

• Isotropic search ellipses and ranges were used.
• The Arzu-Derya block model was constructed using a 15mE by 5mN by 10mRL parent block size.
• The Banu block model was constructed using a 5mE by 5mN by 5mRL parent block size.
• Estimation was carried out using inverse distance squared (ID2) at the parent block scale using a three estimation pass using all available composite.
• A percentage model was used to report precisely the volume of material within each block.

Moisture

• Tonnes have been estimated on a dry basis.

Cut-off parameters

• Indicated and Inferred Resources have been reported above a 1.0 Au cut-off grade.
• Banu 0.5g/t Au cut off.

Mining factors or assumptions

• No mining factors (i.e. dilution, ore loss, recoverable resources at selective mining block size) have been applied.

Metallurgical factors or assumptions

• No metallurgical assumptions have been built into the resources. However, metallurgical test work concludes that recoveries of up to 87% and 64% for gold and silver respectively can be achieved (Tetra Tech DFS).

Environmental factors or assumptions

• Statutory forestry permits have been approved by the Prime Ministry and issued by the Department of Forestry for the Kiziltepe Sector of the Red Rabbit Project.

Bulk density

• Bulk density data was sourced from the Tetra Tech (2013) model.
• Assigned bulk density of has been applied according to the following table:

Prospect	Solid	Assigned Density
Arzu North	200	2.55
Arzu North	201	2.65
Arzu North	202	2.65
Arzu North	203	2.65
Arzu North	204	2.65
Arzu South	100	2.55
Arzu South	101	2.50
Arzu South	102	2.50
Banu	100c	2.55
Banu	200c	2.55
Banu	300c	2.55
Derya	300	2.55
Gapz	400	2.50
Gapz	500	2.50

Classification criteria

• Mineral Resources have been classified on the basis of confidence in geological and grade continuity using the drilling density, geological model and modelled grade continuity.
• Measured Mineral Resources have been defined by a search radius of 5m
• Indicated Mineral Resources have been defined by a search radius of 5-25m
• Inferred Mineral Resources have been defined by a search radius of 25-70m

Block Model verification

• For each deposit, the ID2 model was validated against the input drillhole composites for each domain by visual comparisons carried out against the composited drillhole samples for each domain against the modelled block grade.

Audits or reviews

• The estimated grades were validated against average Au and Ag grade statistics for each lode.

Discussion of relative accuracy/ confidence

• Odessa Resources Pty Ltd place a relative accuracy of +/- 20% (and 90 % confidence level) in the Mineral Resource estimate at the global level for the Indicated Resources based on the estimation technique and data quality and distribution.  Inferred Resources would have a lower level of confidence outside of this range.

Criteria

Explanation

Glossary of Technical Terms:

"Ag" the chemical symbol for silver;

"Au" the chemical symbol for gold;

"cut-off grade" The lowest grade, or quality, of mineralised material that qualifies as economically mineable and available in a given deposit. May be defined on the basis of economic evaluation, or on physical or chemical attributes that define an acceptable product specification;

"g/t" grams per tonne;

"Indicated resource" a part of a mineral resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed;

"Inferred resource" a part of a mineral resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and has assumed, but not verified, geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that may be limited or of uncertain quality and reliability;

"Inverse Distance Squared" a conventional mathematical method used to calculate mineral resources.  Near sample points provide a greater weighting than samples further away for any given resource block;

"JORC" the Joint Ore Reserves Committee;

"JORC 2004" is the previous edition of the JORC Code, which was published in 2004.  It has been superseded by JORC 2012;

"JORC 2012" is the current edition of the JORC Code, which was published in 2012.  After a transition period, the 2012 Edition came into mandatory operation in Australasia from 1 December 2013;

"m" Metres;

"Measured resource" a part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high level of confidence. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drillholes. The locations are spaced closely enough to confirm geological and grade continuity.

"oz" Ounces;

"t" Tonnes;

"Whittle" computer software that uses the Lerch-Grossman algorithm, which is a 3-D algorithm that can be applied to the optimisation of open-pit mine designs.  The purpose of optimisation is to produce the most cost effective and most profitable open-pit design from a resource block model.

Ends

Figure 1
Figure 2

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This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Ariana Resources plc via Globenewswire

HUG#2006265